Pound Bounces on Services Data

There was not much to shout about through yesterday’s session, ranges remained quite narrow and while there were some good data points and central bank speakers, none of it was market moving in any way. ECB President Draghi spoke while launching the new €50 note however, nothing was mentioned about policy and as such Euro crosses remained muted. In the UK GBP pairs held their Monday ranges while the USD rallied through the day before selling off into the US close, a similar action to Friday.

Attention is firmly fixed towards Trump’s meeting with the Chinese President Xi, as anything could potentially happen here and it feels like no one is willing to step in front of this. French elections are also approaching and with three weeks to go, Le Pen had narrowed the gap but last night’s debate once again went to Macron and with little less than three weeks to go, the Euro may find some strength in this. Stocks were little changed through much of yesterday in both Europe and the US while overnight we saw slight gains in China and Japan but caution still remained.

The pound bounced this morning following better than expected Services PMI data from the UK, given last week moves anything deemed positive for the UK would allow scope for a rally in GBP and as such we saw the pound rally against both USD and EUR this morning (amongst others).

The services PMI figure posted 55.0 vs 53.5 which was expected so a considerable beat of expectations, helping to raise the composite figure despite weaker construction and manufacturing figures. GBPUSD rallied to just short of 1.2500, while resistance to the topside towards 1.2560 should hold sterling rallies for now. Support holds around this week’s lows at 1.2422. EURGBP remains range bound between .8500 and .8600, firmer support towards .8485 attract as long as we hold below .8600/.8630 area.

The Euro took little note of the weaker data across the Eurozone this morning, Services PMI data from across the region proved weaker than expected yet EURUSD remains unchanged for the day. 1.0690 holds rallies higher in EURUSD for now, while real sellers are lined up above 1.0830 area. 1.0640 provides some weak intraday support but again, the 1.0500/30 area is where the real buyers are. In the middle of that wider range we are likely to continue to experience chop. Services ISM data and the minutes of the FOMC March meeting headline today’s calendar in the US but attention will also be on the ADP employment report as a preview to Friday’s NFP figures. USD has been in consolidation for the last 5 days so a breakout is likely building.

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